Kind McKenna, the outspoken advocate for innovative funding models that she is, was frustrated by that and wanted to see much more activity beyond that required five percent — including through mission-related investments, or MRIs, and program-related investments, or PRIs.

There’s a subtle difference between the two, though they both fall under the “mission investing” umbrella. As impact investing network Mission Investors Exchangedefines them:

Market-rate mission investments, also known as “mission-related investments,” are part of a foundation’s endowment and have a positive social or environmental impact while contributing to the foundation’s long-term financial stability and growth. Below-market mission investments, also known as “program-related investments,” are designed to achieve specific program objectives while they may earn a below-market financial return.

In the past year and a half, Barra, with its $90 million endowment, has done both. Its first try with mission-related investing happened in March 2016 with a $1 million investment in Reinvestment Fund’s core loan fund, which deploys collective capital into projects that meet the fund’s criteria — typically housing, education, grocery stores, commercial enterprises and health centers that benefit low-income communities.

“That was really a good way to get started,” Wahl said in a phone interview on the heels of a trip to the national Mission Investors Exchange summit in June. Reinvestment Fund has “such a strong track record” with providing financial returns, she said, and the core loan fund offered a chance to “also support an important project.”

That investment carries a three-year term, so Barra is still waiting to earn back its principle, but it’s getting paid interest — 1.25 percent — along the way. Learn more about that investment here.

Then last September, Barra made its first program-related investment in the form of a five-year, $250,000 loan to New Day Chester, Inc., a social enterprise that aims to revitalize downtown Chester by buying unoccupied buildings, rehabbing them and renting them out as artist and community spaces. (Generocity profiled New Day cofounder and Chester native Devon Walls in a story about the 2015 Chester Made initiative here.)

Barra has a thorough explainer of the process on its website. Here’s Walls describing his work at the Media-based Untours Foundation’s Ungala this past April:

Wahl said the Barra staff got the green light from its board to explore projects to fund after a long period of learning about the logistics of mission investing and PRIs. Of the projects it identified, New Day rose to the top because Barra had worked with cofounder Walls before for Boundaries and Bridges, a Chester-based project it funded with a grant in 2015.

Why would a foundation offer a loan over a grant?

“Grants can’t solve all the challenges that we face, and one of the things I think is really interesting about PRIs is they can help foundations de-risk these investments for other funders and prove [they can work],” Wahl said.

Meaning, traditional banks or even CDFIs may consider it too financially risky to invest in a company like New Day, which is young and unproven. But foundations like Barra can take on more risk and offer a four percent interest rate versus, say, the eight or 10 percent of other institutions because Barra’s main goal is to support New Day’s mission.

The organization being funded also has more time to pay back the initial investment — in New Day’s case, five years — which gives it more time “to get their sea legs,” Wahl said. It’s “patient capital.”

But more philosophically, the use of investment dollars over grant dollars is a “mindset shift.” It’s not a handout — it’s a challenge for the organization to prove its self-sufficiency. If it can indeed prove itself, it becomes that much more attractive to a more traditional lender, thus opening the door for further investments.

And when the foundation eventually makes back what it invested, it can reinvest those dollars into another social enterprise or nonprofit.

“It’s leveraging more resources for them rather than giving them a grant that’s going to go away,” Wahl said.

Get everyone on board — Most importantly, the board itself. “Board leadership is critical because board and staff are together on this journey.”

Seek outside resources — Get advice from those who’ve done it, including Mission Investors Exchange and fellow foundations such as the Kind Family Foundation and the Untours Foundation.

If you’re considering it, just do it — “The best thing for us was to learn by doing.”

Other local foundation staff and boards are actively exploring mission investing — for instance, Untours Foundation currently has equity in six social enterprises and loans out to 35 organizations. There may come a time when every foundation is making PRIs and otherwise using their corpus in interesting, capitalistic ways, though for now, most foundations still only expel their required five percent. Still, “I think there is a lot of promise on the horizon,” Wahl said.

Barra, for one, is open to doing more mission investing in the future.

“For us, this is new territory,” she said, so “we are just making sure that we’re proceeding at a good pace. We want to learn as we go along. We’ll continue the conversation, particularly at the board level, so I think we’ll be looking at this on a project-by-project basis.”